Greece will submit its growth and stability plan to Brussels at the end of January after getting the nod from European Commission officials on an agenda it hopes will help to restore confidence in the economy.
The three-year plan is seen as being crucial to convincing investors and the European Commission that Greece is able to control its swelling budget deficit and growing public debt through a combination of spending cuts and increased tax revenues.
A team of officials from the European Commission and the European Central Bank were in Athens last week for three days during which they looked at how the proposed plan will meet its goal of reducing the budget deficit by 4 percentage points this year to 8.7 percent of gross domestic product.
“They want to see the measures we have announced mapped out,” said a source from the Finance Ministry.
“We won’t send a plan to Brussels until we have a green light from one of the officials. There will be no issue of this plan being rejected by the Commission.”
A hike in levies on cigarettes and alcohol, aimed at raising some 500 million euros, and an overhaul of the tax system as of March aimed at helping catch tax cheats, are among the measures the government will use to boost revenue.
On the expenses side, civil servants earnings more than 2,000 euros per month will see their wages freeze this year, while a 10 percent cut in allowances paid in the public sector will save the government about 500 to 600 million euros.
Meanwhile, a senior ministry source confirmed that the Greek government intends to raise 2.5 billion euros of privatisation revenue in 2010 without providing details as to how the money is to be raised.
Speculation that Greece may not be able to meet its borrowing needs and could face bankruptcy has made markets nervous, pushing the premium investors demand to hold 10-year Greek government bonds rather than eurozone benchmark German Bunds to record highs in recent months.
